Contributing factors to fraud include: Poor internal controls, Management override of internal controls, Collusion between employees, and Collusion between employees and third parties.
Red flags are warnings that something could be or is wrong.
Auditors, employees, and management need to be aware of red flags in order to monitor the situation and then take corrective action as needed.
Employees who notice that red flags are ignored believe that they won’t get caught.
A little fraud soon becomes a large one if left to grow.